The Buena Vista School District saw an alarming drop in enrollment in 2010-2011. The fall head count had 888 students while the spring count just a few months later had 773, a 13 percent drop.

At that time, the Saginaw County district was $51,593 in debt, the first time it had overspent in years, according to the Michigan Department of Education.

Nonetheless, in June 2011 — in the midst of red ink and falling enrollment — the Buena Vista Education Association and the school board agreed to a three-year union contract deal that continued the practice of taxpayers paying 100 percent of health care insurance premiums for teachers as well as handing out raises as high as 6.8 percent.

By 2011-12, the deficit increased to $1 million, and today the district is making national news for closing its doors because it could no longer pay its staff.

Stay Engaged

Receive our weekly emails!

email address

"It's hard to justify locking in rising labor costs for a district facing consistent declining enrollment and with no guarantee of increased funding," said Michael Van Beek, director of education policy at the Mackinac Center for Public Policy.

Although politicians, administrators and parents are pointing the finger for the fiscal mess at mismanagement — ranging from drops in enrollment to administrative mismanagement — the teachers' union contract plays a large role in the fiscal mess.

In the fall of 2011, the district highlighted in its deficit elimination plan it submitted to the state that the lucrative teacher's union contract its board had approved just months earlier was a significant part of the problem.

"We have met with the teachers' union to establish dates for reopening 2011-12," the plan stated, adding they would be asking for wage freezes the next two years and for 20 percent contribution from teachers on health care premiums.

Buena Vista could have addressed the health care issue when it was negotiating with the union because a state law that required that all school employees pay 20 percent of health care premiums had already been passed.

Instead, the school district and the union agreed to a deal to pay 100 percent of the health care premium costs just months before the law took effect.

The union contact also awarded raises every year in the form of step increases, where teachers with up to 12 years experience received raises ranging from 3.6 percent to 6.8 percent, depending on longevity and education level.

In 2011-12, the union contract called for a 1 percent lump sum payment to its teachers despite the deficit being projected to expand to 20 times what it was the previous year. A top-of-scale teacher with a master's degree earning $72,723 would have received $727.

The school district also was one of just a handful of districts that didn't qualify for an additional $100 per student in state-aid payment for meeting the state's best practices.

Jan Ellis, spokeswoman for the Michigan Department of Education, said the district's most recent deficit elimination plan that was submitted in April was rejected because it didn't reduce the deficit.

The state department of education is withholding Buena Vista's state aid payments as repayment for $580,000 the district received for the Wolverine Secure Treatment Center, which severed ties with the district in 2012.

A notice on the school district's website says that almost all of the district's staff has been laid off and school is closed. A meeting for parents and community members is scheduled for 6 p.m. today at Buena Vista High School.